Correlation Between Shyft and AGCO

Can any of the company-specific risk be diversified away by investing in both Shyft and AGCO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shyft and AGCO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shyft Group and AGCO Corporation, you can compare the effects of market volatilities on Shyft and AGCO and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shyft with a short position of AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shyft and AGCO.

Diversification Opportunities for Shyft and AGCO

0.5

Correlation Coefficient

Shyft  AGCO

Very weak diversification

The 3 months correlation between Shyft and AGCO is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shyft Group and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and Shyft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shyft Group are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of Shyft i.e., Shyft and AGCO go up and down completely randomly.

Pair Corralation between Shyft and AGCO

Given the investment horizon of 90 days Shyft Group is expected to under-perform the AGCO. In addition to that, Shyft is 1.49 times more volatile than AGCO Corporation. It trades about -0.08 of its total potential returns per unit of risk. AGCO Corporation is currently generating about 0.05 per unit of volatility. If you would invest  9,291  in AGCO Corporation on December 27, 2024 and sell it today you would earn a total of  595.00  from holding AGCO Corporation or generate 6.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Shyft Group  vs.  AGCO Corp.

Shyft Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shyft Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AGCO

Risk-Adjusted Performance

Insignificant

Over the last 90 days AGCO Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak fundamental indicators, AGCO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Shyft and AGCO

The main advantage of trading using opposite Shyft and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shyft position performs unexpectedly, AGCO can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AGCO will offset losses from the drop in AGCO's long position.

The idea behind Shyft Group and AGCO Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.